As anticipated, the real estate market across the top 7 cities in Q3 2018 stayed subdued. The quarter saw a meagre 3% increase in the overall fresh housing supply as against the preceding quarter.

These new launches were largely dominated by the lower-budget segment (< Rs. 40 lakh) with nearly 42% of the total new supply. 33% launches were in the mid segment (Rs. 40-80 lakh) and the remaining 25% in the luxury and ultra-luxury segments.

The third quarter of the year is usually a lull period due to the 15-day shraddh period, which is considered inauspicious for buying property. Consequently, builders keep new projects on hold for the ensuing festive season beginning early October.

In terms of purchases, there was a slight increase of 9% during the Q3 as compared to Q2 2018 across the top 7 cities of India. This indicates that even though home buyers’ sentiments are positive, many continue to wait and watch.

ANAROCK’s ‘Real Estate Consumer Outlook Survey’ confirms that nearly 61% prospective buyers are looking to buy their property within the next one year. Given this, the festive season may bring a boost to the real estate sector this year.

“Q3 2018 saw only a minimal increase in both new launches and absorption over the previous quarter,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “However, there has been a 51% jump in new housing supply against Q3 2017. Purchases also rose by 15% this quarter as against Q3 2017. Buyers and developers alike are pinning their hopes on the ongoing festive season for better deals and faster deal velocity respectively. Lower-budget range housing continues to keep the momentum going. This segment saw a nearly 65% increase in supply in Q3 2018 as against the same period last year.”

Affordable Housing

Q3 2018 New Launch Tracker

The top 7 cities (NCR, MMR, Chennai, Bengaluru, Pune, Kolkata and Hyderabad) saw 52,150 new units launched in Q3 2018. This is a notable increase over the 50,600 units in Q2 2018.

The cities contributing most to new unit additions in Q3 2018 include MMR, Pune, Bengaluru, and Chennai. Together, these three cities accounted for 76% of the new supply.

Kolkata saw the launch of nearly 4,050 This is a significant rise of 59% from Q2 2018, and an increase of more than 500% from Q3 2017.

MMR saw the launch of approximately 19,850 units – a rise of 42% from Q2 2018.

Hyderabad added 4,150 units, a quarterly decline of 25%. Developers here are holding on to new projects in anticipation of the launch of much-awaited RERA web portal in Telangana to begin online registrations.

Chennai saw new supply increasing to 4,850 units – a rise of 15% from last quarter. Over 40% new supply was added in the lower-budget housing segment.

NCR contributed only 8% of the total new supply with 4,200 units. This marked a decline of 50% of units from the previous quarter. The drop in Q3 2018 was because of developers’ focus on completing previously launched projects, as also the ongoing crisis of stalled or delayed projects in NCR. However, there may be new launches during the ongoing festive season.

Bengaluru added 7,175 units, a quarterly decrease of 18%. Interestingly, this is the only city which has the maximum supply of units (nearly 55%) in the mid segment (Rs. 40-80 Lakh) other than lower-budget housing launches.

Developers’ focus on completing existing projects rather than launching new ones aligns with the current market sentiment.

ANAROCK’s Real Estate Consumer Outlook Survey underscores that, to the backdrop of stalled or delayed projects, only 5% prospective buyers are looking to buy homes in new projects. 49% prefer to buy ready-to-move-in properties, and 46% prefer projects that will complete within a year.

“In terms of housing purchases during Q3 2018, all cities together witnessed an increase of 9% over the previous quarter,” says Anuj Puri. “MMR and Pune together led the pack with 27% rise in deals compared to the previous quarter. This is attributable to the aggressive implementation of Maha RERA.

Out of all the states and Union Territories in India, Maharashtra takes the first place when it comes to proactive RERA deployment. This had boosted home buyer sentiment in these two cities significantly.”

Q3 2018 Sales Tracker

Nearly 67,175 units were sold in Q3 2018 with NCR, MMR, Bengaluru and Pune together accounting for 82% of the overall sales.

MMR saw the highest jump in sales this quarter, with sales increasing by 16% (from 15,750 units in Q2 2018 to 18,200 units in Q3 2018).

NCR and Hyderabad sales increased by a mere 2% over the previous quarter with 11,350 and 4,850 units respectively.

With only a slight improvement in sales and new launches, the overall unsold inventory declined by just 2% (from 7.02 lakh units in Q2 2018 to 6.87 lakh units in Q3 2018). The decline over Q3 2017 is 8% (from 7.44 lakh units).

Pricing Trends

Residential property rates across the top cities remained stagnant in Q3 2018 compared to the previous quarter. Kolkata was an exception – property rates declined by around 1%. The considerable unsold stock in the market is keeping the ticket sizes range-bound.

Lower-budget and mid-segment housing continued to dominate, with 75% of unit launches (39,300 units) costing under Rs. 80 Lakh. The lower-budget segment comprised of a whopping 42% share of the total new launches.

Despite the ongoing pain in Indian real estate, both housing sales and new launches have increased q-o-q. The future depends on a favourable macroeconomic environment in 2019.